An Israeli court ruling that the former Melbourne school principal Malka Leifer, who is accused of child sex crimes, could be freed from custody into home detention has angered her alleged victims.

Dassi Erlich, who has accused Leifer of abusing her, said she was “absolutely outraged” at the ruling as relayed to her by friends in the courtroom in Jerusalem.

The magistrates court ruled that Leifer should be released from the closed psychiatric ward where she has been held for the past week but delayed implementation of the order for 48 hours to allow prosecutors seeking her extradition to appeal.

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After allegations surfaced against her in 2008, Leifer and her family left for Israel and have been living in the West Bank settlement of Emmanuel.

A previous extradition attempt between 2014 and 2016 failed after Leifer was admitted to mental institutions and expert opinions determined she was not fit to stand trial.

But undercover private investigators filmed her depositing a cheque at the bank and shopping, prompting Israeli authorities to launch an investigation to see if she was faking mental illness to avoid extradition, leading to her 12 February arrest.

Wednesday’s court ruling, seen by Agence France-Press, said psychiatrists who examined her in custody found her to be suffering emotional distress, “but not due to the mental illness she was claiming”.

It said that she would be confined to a house in Kibbutz Beit Haemek, a collective community in the Galilee district of northern Israel, where she would be under the 24-hour supervision of the local rabbi and other court-approved monitors.

“The judge has ordered she be released on bail at 10am on Friday morning and at this moment the judge’s order has absolutely no restrictions on her freedom – nothing,” Erlich said in Melbourne.

She said Leifer’s lawyer, Yehuda Fried, had brought in Rabbi Yitzchak Dovid Grossman who said he would take care of the former educator.

“The rabbi who is guaranteeing he will take care of her, he has said in court that it is humiliating for her to be held under custody,” she said. “We now understand that the prosecutors are going to appeal this decision but at the moment the judge’s standing rules that she will be let out on bail.

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“If this bail is upheld and the prosecutor loses the appeal on this, there are absolutely no restrictions on her movements. She is free to do whatever she pleases. So basically we are back to square one.”

The 54-year-old former principal has been in custody since Israeli police rearrested her.

The Jewish community leader Manny Waks, an advocate for Kol v’Oz, a Jewish organisation combating child sex abuse, said it was “outrageous” Leifer had been allowed to “continue her charade”.

“It seems, once again, that Leifer’s interests have been placed well ahead of her alleged victims,” he said.

A spokesman for Australia’s attorney general, Christian Porter, said on Wednesday night: “These are matters for the local courts.”